A Building on the Brink: Property report puts $15.7M price tag on Winthrop Hotel’s deferred maintenance

A report that assesses the condition of the Winthrop Hotel in downtown Tacoma provides a stark look at the severity of deferred maintenance at the 12-story, 86-year-old building at the corner of South Ninth and Commerce Street.

According to the report, which was prepared for the Tacoma Housing Authority by Bothell, Wash.-based Criterium-Pioli Engineers in May 2009, the building is in need of approximately $15.7 million in repairs and upgrades over the next 10 years. The most expensive items include $4.15 million in structural and seismic improvements; $2.15 million in exterior masonry and window repairs; and $1.79 million in plumbing improvements.

“The Winthrop Hotel has a significant amount of deferred maintenance, of which there are many areas that are in need of immediate correction,” wrote the report’s authors. “We believe that building envelope and plumbing system restoration on this building is needed as soon as possible. There is evidence of moisture entry in numerous places around this building from the roofs, windows, parapets/gutter, terra cotta, and also from the plumbing system. There is evidence of current structural damage that we can see and it is certainly likely that there is much more that we cannot see. The longer that this moisture damage is allowed to continue, the more damage that can happen to the structure (and interior finishes).”

The assessment was included in interim City Manager Rey Arellano’s Aug. 4 weekly report to Tacoma City Council and in response to an inquiry raised July 19 by Councilmember Jake Fey during City Council’s noon study session. At that meeting, the Tacoma Partnership — which includes the Economic Development Board for Tacoma-Pierce County, Executive Council for a Greater Tacoma, Tacoma Pierce County Chamber of Commerce, and the City of Tacoma and aims to improve downtown Tacoma — provided status updates on a variety of key downtown projects, including a long-standing plan to renovate the Winthrop Hotel, which is located at 776 Commerce Street and is home to approximately 200 low-income residents.

In 2007, Tacoma-based Prium Companies LLC purchased the building for approximately $6.5 million by using a $4.5 million loan from Frontier Bank (now Union Bank of California), and a $2 million loan from the City of Tacoma. In 2009, Tacoma Housing Authority considered purchasing the building. Last month, The News Tribune reported the Winthrop Hotel is for sale and the company’s co-founders have declared bankruptcy and could owe as much as $350 million due to a range of failed development projects.

Criterium-Pioli Engineers’ report is two years old. It’s unclear how much — if any — of the needed repairs have been addressed. “As part of the [Housing and Urban Development] contract for Section 8 housing, the owner is required to fund a monthly replacement reserve to address needed building improvements,” noted Arellano in last week’s report. “According to documents filed with the U.S. Bankruptcy Court, $87,000 in replacement reserve funding is set aside annually. In 2010, approximately $115,000 in building repairs/improvements were made.”

Still, the building’s status weighs heavily on downtown Tacoma’s future, according Tacoma Partnership co-manager Tom Luce.

“The Winthrop Hotel continues to be probably the most difficult problem . . . and I think that its difficulties are fairly well-cataloged at this point,” said Luce during the study session July 19. He compared the situation at the Winthrop Hotel to an earlier situation involving the Luzon Building — a downtown building dating back to the 1890s that was demolished in 2009 after decades of deferred maintenance. “A significant amount of investment is going to have to be put into the Winthrop in order for it to not to go the way of the Luzon Building at some point.”

Besides deferred maintenance, the Winthrop Hotel faces another threat: foreclosure. “Currently, Union Bank continues to still hold the note on that building,” said Luce. “I would not be surprised in the next six to 12 months if Union Bank has to call the note on that building. At what point does the value of the building drop down to zero, and when it does, what is our plan to try to rescue it?”

Luce also raised a concern held by many affordable housing advocates: jamming nearly 200 people into an outdated and crumbling downtown high-rise is a broken model for affordable housing. “The Tacoma Partnership’s position on this is, first and foremost, is that we believe there is a better way to provide housing to the people at the Winthrop,” said Luce. “I don’t believe the housing there right now would qualify under kind of a modern idea of what mixed income or affordable housing should look like. I think it’s an outdated model for how you should apply housing philosophy today.”

Luce told councilmembers a private investment group came in a few months ago interested in taking on the Winthrop. The group did its own own property assessment but walked away from the project. He explained that the cost to upgrade and renovate the building is too expensive for one public or private entity. Luce suggested one plan could be to bring in multiple public and private entities to share in the ownership and revitalization costs.

Luce added, “I come with no answers on the Winthrop. I come with some thoughts and I come with a commitment by the partnership and I think the city has clearly invested assets into the Winthrop to try to find a solution here.”

Downtown Tacoma's Winthrop Hotel. (FILE PHOTOS BY TODD MATTHEWS)

In 2009, the Tacoma Daily Index published a series of interviews with Winthrop residents. To read the complete series, click on the following links:

Todd Matthews is editor of the Tacoma Daily Index and recipient of an award for Outstanding Achievement in Media from the Washington State Department of Archaeology and Historic Preservation for his work covering historic preservation in Tacoma and Pierce County. He has earned four awards from the Society of Professional Journalists, including third-place honors for his feature article about the University of Washington’s Innocence Project; first-place honors for his feature article about Seattle’s bike messengers; third-place honors for his feature interview with Prison Legal News founder Paul Wright; and second-place honors for his feature article about whistle-blowers in Washington State. His work has also appeared in All About Jazz, City Arts Tacoma, Earshot Jazz, Homeland Security Today, Jazz Steps, Journal of the San Juans, Lynnwood-Mountlake Terrace Enterprise, Prison Legal News, Rain Taxi, Real Change, Seattle Business Monthly, Seattle magazine, Tablet, Washington CEO, Washington Law & Politics, and Washington Free Press. He is a graduate of the University of Washington and holds a bachelor’s degree in communications. His journalism is collected online at wahmee.com.